Friday, November 15, 2013

Min Wage - Easier Sell for the Less Informed

Various state legislators and interest groups around the United States are pushing for increases in the minimum wage. In California, for example, even Republican Gov. Arnold Schwarzenegger now advocates raising the state minimum wage from its current $6.75 an hour to $7.75 by July 2007. But when the minimum wage law confronts the law of demand, the law of demand wins every time. And the real losers are the most marginal workers - the ones who will be out of a job.

The federal minimum wage is currently $7.25 an hour, but some states and cities have minimum wages that are significantly higher. Furthermore, eight states raised their minimum wage, effective January 1, 2012.
  • Vermont raised its minimum wage from $8.15 an hour to $8.46 an hour.
  • Oregon bumped its minimum wage from $8.50 an hour to $8.80.
  • Washington state raised its minimum wage from $8.67 to $9.04 — the highest of any state.
Finally, San Francisco, which imposed a city-level minimum wage a few years ago, increased its minimum from $9.92 to $10.24.
Proponents of a minimum wage argue that a wage floor is necessary to lift people out of poverty, especially those earners who support families. However, the federal law sets a lower minimum for some classes of workers:  tipped employees must be paid a minimum of $2.13 an hour, and some farm workers are exempt.
Some people argue the minimum wage is not enough, and have proposed more generous “living” wages. A living wage aims to provide a minimum standard of living, accounting for the cost of housing and basic needs for an individual, or even a family of three or four. Some New York City officials are considering a bill requiring local businesses that receive government contracts to pay a “living” wage of at least $10.00 an hour, or $11.50 an hour if they don’t offer their employees health insurance. Los Angeles already requires companies that contract with the city or operate on city property to pay a living wage of $9.64 per hour with health benefits or $11.84 per hour without.

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